The SAA-Takatso deal was amicably halted by both the South African Government and the consortium. However, Members of Parliament have said further questions still need to be answered. They suggested that the transaction be investigated by the Special Investigating Unit (SIU).
The Telegram, Reuters and DM
In a move to address the controversy surrounding the failed sale of a majority stake in South African Airways (SAA), South Africa’s parliament announced on Wednesday that it will be referring the collapsed deal to a special investigative unit for further scrutiny.
As part of its efforts to stop frequent bailouts of the national flag carrier, the government announced the agreement to sell a controlling stake in SAA to the Takatso Consortium in 2021.
Last week, Public Enterprises Minister Pravin Gordhan said the government and the consortium had agreed “there was no clear path forward” for the transaction after a new business and asset valuation.
Parliament’s Portfolio Committee on Public Enterprises in a statement said the issue would be referred to the independent Special Investigating Unit (SIU), which investigates corruption at state entities, to ensure “accountability and transparency.”
“It is essential to address the sequence of events that led to the undervaluation and to investigate any potential corruption or misconduct in the process,” it said.
There have been questions regarding the valuation of SAA, as well as how Takatso was chosen as the strategic equity partner despite not making the shortlist of transaction advisor Rand Merchant Bank (RMB). Additionally, concerns were raised about why Public Enterprises appointed an external entity for the deal if they had capacity constraints, yet were able to adjudicate the SAA share sale after the transaction advisor left.
There is a dispute surrounding the signature of the former director-general of DPE, Kgathatso Tlhakudi. He is said to have signed the agreement, but in a letter to National Assembly Speaker Nosiviwe Mapisa-Nqakula, as reported by the Daily Maverick, (dailymaverick.co.za) he asserts that he never signed the Molisane Memorandum on April 8, 2021, which selected the Takatso consortium as SAA’s strategic equity partner.
The letter seen by the Daily Maverick, written on 13 March and was referred to the public enterprises committee reads in part: “I did not sign such a memorandum.
“Minister Gordhan chose the Takatso consortium on his own and set up a negotiating team in the ministry to negotiate the terms of the deal with his preferred SEP… I was not part of this team,” wrote Tlhakudi, adding that the first time he had heard of the deal was in November 2021.
“The minister has a lot to answer for with regard to the SAA privatisation.”
The SIU has subpoena powers, can litigate on the state’s behalf and refers evidence suggesting criminal conduct to the country’s prosecutors.
The South African government has said SAA would revert to being fully state-owned and that a new way to raise money based on the airline’s assets would be explored with financial institutions. It ruled out giving SAA money in the months ahead.
The embattled airline was on the verge of being liquidated before it entered a form of bankruptcy protection in 2019.
Its finances worsened during the COVID-19 pandemic thanks to restricted air travel and depleted its already minimal cash flow, forcing the government to hunt for a strategic equity partner to keep it afloat.
Gordhan reassured airline employees that their jobs were safe and that the company could sustain itself financially for the next year to 18 months.